JV Article: Argentina Lithium targets first resource by September

Argentina Lithium & Energy (TSX-V: LIT; US-OTC: LILIF), backed by Chrysler automaker Stellantis, says it’s drilling the Rincon West lithium brine project, located beside a Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) venture, for an initial resource estimate in September.   

Stellantis, which also owns Fiat and Peugeot, has invested US$90 million (paid in Argentine pesos, valued at approximately US$45 million after conversion) for a 19.9% stake in Argentina Lithium & Energy. The manufacturer is keen for the 15,000 tonnes per year in lithium carbonate offtake to supply its battery plants planned across the Americas.  

Representative of recent results at Rincon West, drill hole RW-DDH-010 tested a 295.5-metre interval ranging from 245 to 366 mg per litre lithium. Eleven holes were drilled last year and four more holes are planned to extend over the nearby salt flat at the project.  

“Drilling is confirming our initial hypothesis, that the concentrated lithium brines tested by our neighbour in the central salar also extend to our west-side properties. Future drilling will test whether the same is true for our northern and eastern blocks on the same basin,” Miles Rideout, vice-president of exploration, said by phone from Mendoza, 1,000 km west of Buenos Aires. “The project’s first resource, due this year, should prepare us for a prefeasibility study in 2025.”  

Argentina Lithium & Energy is vying to develop projects in South America’s lithium triangle that holds some 60% of the world’s known reserves of the battery metal. The region is dominated by brine operations run by Albemarle (NYSE: ALB), Sociedad Quimica y Minera de Chile (NYSE: SQM) and Livent (NYSE: LTHM).  

S&P Global forecasts the strength in long-term lithium demand to be maintained even after prices for the light metal plummeted last year from record highs in 2022. In November, the analysis firm increased its outlook for electric vehicle sales to more than double 2023 levels to 30.8 million by 2027 compared with a 29.2 million estimate early last year.  

Arid area 

Rincon West is located about 3,760 metres above sea level in the arid Alto Plano region of Salta Province, Argentina, bordering Chile and about 200 km south of Bolivia. Rio Tinto’s Rincon project is next door while Argosy Minerals’ (ASX: AGY) own Rincon project lies to the east. The Rincon West project comprises several properties and is near rail, water, roads and power.  

The company plans to move drilling crews about 15 km north to the Paso de Sico section after drilling at the main Rincon West block is completed in the second quarter, and then later about 20 km east to a new acquisition named Don Fermin.  

Argentina Lithium & Energy also has the Antofalla North project, located 130 kilometres to the south, immediately north of Albemarle’s (NYSE: ALB) Antofalla project. Drilling permits on the 100-sq.-km project are expected in the second quarter, Rideout says. The company plans a large geophysical exploration campaign before starting six broadly spaced drill holes, followed by infill drilling to define the resource. 

“Albemarle has a very large mid-grade resource to our south. If we can produce similar brines in our drilling, we could have a vast potential for a second resource,” Rideout said. “Our initial drill results will be interesting to watch for.” 

Discovery experience 

Argentina Lithium & Energy. is part of the Grosso Group, a resource management group headed by LIT chairman Joseph Grosso, and president and CEO Nikolaos Cacos. The Grosso Group has operated since 1993 and been involved in major Argentinian discoveries such as the Gualcamayo gold mine now held by California-based Eris, SSR Mining’s (TSX: SSRM; NASDAQ: SSRM) Chinchillas silver-lead-zinc mine and Pan American Silver’s (TSX: PAAS; NYSE: PAAS) Navidad silver-lead project. 

Through Argentina Lithium & Energy, the group is exploring lithium brine prospects covering more than 670 sq. km on four salt lakes or salars in the northern provinces of Salta and Catamarca, within the high-plain district of western Argentina. The properties, including the early-stage Pocitos and Incahuasi brine projects, are located near key infrastructure and towns, with year-round road access.  

The Rincon West project is comprised of three property blocks. The main western block is 17 km south of Provincial Route 51, linked to Pacific ports in Chile. An electrical power corridor lies just east and north of the salar, running across the company’s northern Paso de Sico block, located on the aforementioned highway and also on a major electrical power corridor.  The eastern Don Fermin block is also located on the power corridor and is accessed by a secondary provincial roadway.   

On Nov. 30, the company announced the exercise of the Villanoveno II option, part of the west block at Rincon West. Acquisition of the second property on the west block, Rinconcita II, from provincial mining company REMSA, is subject to completion of a US$2.5 million work program by December 2024.  

The northern Paso de Sico block is optioned from a private owner, and is contingent on US$1.4 million payments spaced over two years and concluding this September. The eastern Don Fermin block is optioned from a second private owner, and is contingent on US$2.5 million payments spaced over 18 months and concluding this December.  

The company’s drill holes at Rincon West often extend deeper than 300 metres to reach the bottom of the aquifer. Drill hole RW-DDH-011 tested a 321-metre interval ranging from 246 to 344 mg per litre, the company said in January. Previous intercepts include 153 metres grading from 329 to 393 mg per litre in hole RW-DDH-006, 132 metres grading from 334 to 382 mg per litre in hole RW-DDH-004, and a 258-metre interval ranging from 287 to 402 mg per litre lithium in hole RW-DDH-009. 

Geophysical surveys 

Historical vertical electrical soundings at Rincon West initially identified potential brines at less than 100 metres depth. More recent transient electromagnetic (TEM) surveys and a detailed controlled source audio-frequency magnetotellurics (CSAMT) survey detected what could be brines in 20.4 sq. km or nearly 70% of the main property block.  

So far, 12 exploration holes have confirmed the presence of concentrated lithium brines hosted in porous formations, coincident with the geophysical conductors. Hydrogeological analysis is ongoing to develop 3-D volumetric models of the brine resource.  

At Antofalla North, CSAMT surveys showed conductive units in horizontal bedding to about 500 metres depth. The project is adjacent to Albemarle’s Antofalla project and about 25 km from Livent’s Fenix brine operation at Salar del Hombre Muerto, the country’s largest lithium producer.  

Argentina Lithium & Energy is planning 115 line-km of TEM soundings this year to delineate brine deposits at Antofalla North, to be followed by six reconnaissance diamond drill holes, totalling about 2,400 metres. A positive discovery would be followed by up to 24 infill holes for about 7,200 metres. 

The work plan at the Pocitos project, about 38 km south of Rincon West, is to conduct 170 line-km of TEM soundings this year to detect and delineate brine concentrations for testing. It may be followed by up to four drill holes in a first stage.  

At Argentina Lithium & Energy’s Incahuasi project, located in Catamarca province about 12 km west of Lake Resources’ (ASX: LKE; US-OTC: LLKKF) Kachi project, four drill holes have confirmed lithium-bearing brines averaging 109 mg per litre and 6,718 mg per litre potassium. The company plans 90 line-km of TEM there this year.  

Under last year’s deal between Stellantis and Argentina Lithium’s local subsidiary, Argentina Litio y Energia, the 19.9% stake is convertible to the same proportion in the parent company stock. Monetary policy in Argentina in 2023 set an official exchange rate of approximately twice the purchasing power of the Argentine peso. Receiving the investment in pesos, the company quickly moved to convert the funds to hard currency and other forms, to preserve value against inflation and monetary fluctuations, preserving about 50% of the declared investment value to fund exploration operations.  

The investment agreement secures a seven-year, 15,000-ton-per-year lithium carbonate offtake agreement for Stellantis, should the junior become a lithium producer. Sales are to be based on an agreed lithium market-based price formula at the time of each shipment. Excess production beyond offtake requirements and follow-on sales after the completion of the offtake agreement would revert to regular market prices. 

Shares in Argentina Lithium & Energy more than doubled after the Stellantis deal in September, but they slid by 22% this year to 28¢ apiece near press time, valuing the company at about $37 million.  

The preceding Joint Venture Article is PROMOTED CONTENT sponsored by Argentina Lithium & Energy and produced in co-operation with The Northern Miner.  For more information visit argentinalithium.com.